Rupiah Leads Asia Losses as Officials Show Tolerance on Weakness

Indonesia’s rupiah led declines in Asia and reached a 16-year low after the central bank signaled it may be comfortable with the losses to boost exports.

Bank Indonesia remains focused on guarding macroeconomic stability and sees the current exchange rate as competitive for exporters, Deputy Governor Perry Warjiyo said Tuesday. The nation needs to narrow the current-account deficit, Finance Minister Bambang Brodjonegoro told reporters March 10, adding that the rupiah’s decline won’t endanger the state budget.

“The focus is on the current account and growth, as the central bank sets no target for the rupiah,” said David Sumual, chief economist at PT Bank Central Asia. Capital goods imports to support faster growth will need to rise, weighing on the rupiah, he said.

The rupiah fell 0.8 percent in the biggest drop since Jan. 30 to close at 13,192 a dollar, prices from local banks compiled by Bloomberg show. It reached 13,246 earlier, the weakest since August 1998. One-month non-deliverable forwards declined 0.5 percent to 13,397, according to data compiled by Bloomberg.

Indonesia’s exports contracted for four straight months through January, while the current account has been in deficit since 2011.

Government bonds due September 2025 declined, with the yield rising nine basis points, or 0.09 percentage point, to 7.77 percent, according to the Inter Dealer Market Association. That’s the highest level since Jan. 19.

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